Sentiment in National Semiconductor (NSM, news, chart, volatility) is bearish for a second day, even as the stock reverses losses and heads sharply higher. NSM hit a low of $9.34 after reporting better than expected fourth quarter results, but guiding estimates lower for the first quarter. Shares have since recouped the losses and, at $11.72, are up 25 percent from the lows of the day. Yet, directional sentiment in the options order flow is clearly bearish (72 percent), as volume has jumped to five times the typical levels, with 13,000 puts and 3,000 calls traded. Dec 10 and 12.5 puts are leading the order flow, with about 85 percent trading offerside. Yesterday, Dec 10 puts were the most active. 6400 traded and buyers led the flow, paying from 45 to 80 cents and bidding implied volatility up nearly 15 points to roughly 100%. Implied volatility has since eased back to 88 percent.
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Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.